Builder Confidence for Single-family Homes May be Stretched

HousingStartsBuilderConfidence-credit-NationalAssociationofHomeBuilders_CapitalEconomics-postedDailyBusinessNewsMHProNews)In an examination of the relationship between single-family housing starts and builder confidence as derived from the National Association of Home Builders (NAHB) monthly survey, businessinsider stated the bullishness of builders may be ill-advised, as MHProNews has learned.

Even though confidence rose to the highest level in June since January, hitting 60 (any number over 50 indicates builders are confident), Capital Economics’ Matthew Pointon reports builder confidence may have to fall initially:

Thanks to both bank caution and a host of new regulations there is no chance of a return to the very loose credit conditions of the mid-2000s, which helped drive the construction boom. So, although starts will increase towards confidence, we also suspect confidence will fall back towards starts. Indeed, there have been a couple of occasions in the past when the NAHB measure rose well above starts — in the mid-1990s and early 2000s. But in both cases it was a fall in confidence which restored the relationship, rather than a rise in housing starts.” See chart. ##

(HousingStartsBuilderConfidence-imagecredit-NationalAssociationofHomeBuilders/CapitalEconomics-postedDailyBusinessNewsMHProNews)

matthew-silver-daily-business-news-mhpronews-comArticle submitted by Matthew J Silver to Daily Business News-MHProNews.

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